After a startling raid in Baghdad, the U.S. launches an investigation into its former ally Ahmad Chalabi. Was he working for Iran?

Ahmad Chalabi likes to sleep in. He does his work at night, engaging in endless back-room meetings and talk sessions that often drag on past midnight. On most days he rises late and eats breakfast alone--but last Thursday his wake-up call came early. At 10 a.m., five armored humvees pulled up outside Chalabi's two-story house in west Baghdad. While U.S. soldiers cordoned off the street, seven Iraqi police officers broke down the front door and stormed the living room.

Chalabi stumbled downstairs to find cops rummaging through his effects and preparing to arrest one of his drivers. "What are you...